Yesterday was the first real panic that the market has seen since the “Glitch” on May 6th. The strange low that day of 1,066 is being generally accepted as an anomaly with the “real low” being at around 1,100 on the S&P 500.
The accuracy of this guesswork is in question. However if true, then yesterday’s low on the S&P at 1,100.66 could be considered a successful test of the psychologically important round number of 1,100. More than that it was, at least temporarily, a successful test (its third) of the 200-day moving average now at 1,103.44.
And so the major question at hand is this: Will the S&P 500 hold at the important zone of 1,085 to 1,115 which contains the 200-day moving average, or will it penetrate it and signal us that a major correction is underway?
Then, we have today’s cut through the 200-day moving average, if prices head south, the next target is at 1,070 and then the February low at 1,050.
Most expect buyers to get aggressive on a pullback to the 1070-1050 zone. I expect the SPX to trade back to 1200 by August despite the EU’s sovereign debt problems. But remember my ultimate long term view is bearish, market will fall and retest March, 2009 low!
Finally, a word of wisdom, "Never predict the market, listen,read and observe the market and let it tell you what to do"
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